Signs that housing construction was improving would be good news for the Reserve Bank of Australia, which was counting on construction to help make up for slowing resources investment.

Demand for off-the-plan apartments drove the residential apartment construction activity sub-index up by 20 points to 57.7 points, its first increase since May 2010. A reading above 50 points indicates expansion.

Melbourne property developer
Michael Yates
said the market had been flat for 18 months until this year.

“There was absolutely no confidence, people had the money, they were saving but they were very concerned about the political situation," he said.

“It has stabilised and confidence has returned and that’s obvious with the number of sales taking place, especially over the last three months."

Mr Yates, who had built apartments worth up to $1.5 million in the inner-city suburb of South Yarra, said overseas buyers and low interest rates were helping drive sales.